Kalshi raises $1B at $40B valuation, doubling May's price tag

What's the deal? Prediction market Kalshi has closed a $1 billion Series G round at a $40 billion valuation, co-founder and chief executive officer Tarek Mansour said. Sequoia Capital and Wellington Management led the round, with Baillie Gifford, Morgan Stanley Investment ManagementDealroom has a profile for this one. Try Dealroom →, Coatue Management, and Andreessen Horowitz also participating.

Why now? The raise nearly doubles the $22 billion valuation Kalshi fetched in May and vaults it past rival Polymarket, last valued at about $21 billion. Prediction markets, where users trade contracts on outcomes like elections and sports, have surged in popularity over the past two years.

What's the endgame? The money funds Kalshi's product roadmap for retail and institutional users, Mansour said. The Series G is widely expected to be its last private round before an initial public offering, though Mansour would say only that "there's been discussions."

What could go wrong? Dozens of state attorneys general argue Kalshi's sports contracts amount to illegal gambling and should fall under state law. Kalshi maintains it operates as a federally regulated exchange under the Commodity Futures Trading Commission; appeals courts have split, and New Jersey has petitioned the Supreme Court on whether federal law pre-empts state rules.

Mansour frames the fight as routine, citing the decades-long debate over grain futures. Investors "invested in a company that does everything by the rule," he said, adding that regulatory risk is "embedded into the valuation."

The signal: At $1 billion, this ranks among the largest US fintech raises on record — above the 95th percentile for the sector. The sharp repricing is a striking vote of confidence in Kalshi's growth, not proof that the business model's legal footing — or its path to an IPO — is settled.

By the numbers: In its announcement, Kalshi said the $40 billion is a post-money valuation and that Stripes, Layer Global, Sequoia Global Equities, CapitalG, Hudson River Trading and Balyasny Asset Management also joined. It said annualized trading volume across the business now exceeds $1 trillion, its commodities business generates more than $100 million in annualized trading fees after three months, and its perpetual futures have done $83 billion in volume with more than 500,000 traders since launching a few months ago. Next up: indices, single-stock perpetual futures and markets on the price of compute.

The Series A deck: Days after the round, Sequoia partner Alfred Lin published the full Series A deck Mansour and co-founder Luana Lopes Lara used to pitch the firm, which first backed Kalshi in 2020. Lin wrote that Sequoia "almost missed the opportunity entirely due to a miscommunication." He noted that Kalshi was regulatory-first from the start, and that it hit and beat the deck's hockey-stick projection, though the real curve was "MUCH choppier than planned." Mansour has said it felt like nothing was working for five years before everything clicked.

A record October: Kalshi's volume has kept climbing since the round. DeFiRate data show about $95.5 billion in contracts traded on Kalshi from 2 to 31 October, measured at face value rather than cash paid, up 55% on the previous 30 days, with a record $5.1 billion day on 24 October. Serial founder Martin Varsavsky (Viatel, Jazztel, Fon) pointed out that the 2020 Series A deck projected $5.1 billion in monthly volume, and that Kalshi spent its first two years getting CFTC approval as a federally regulated exchange, granted in November 2020, three months before Sequoia led the $30 million Series A. He compared it with his own fight in 1994, when AT&T asked the FCC to block his callback telecoms business: "When a startup takes on a regulated industry, the permission is part of the product."

Read more: The New York Times, Kalshi, DeFiRate, Martin Varsavsky (X)

Image: cover of Kalshi's Series A deck, via Alfred Lin